CAIIB: Compulsory Paper - II : BANK FINANCIAL MANAGEMENT (BFM) (Syllabus-Topics)

MODULE - A: International Banking 

• Forex Business; factors determining exchange rates, Direct and indirect quotations, spot / forward rates, premium and discount, cross rates. 
• Basics of forex derivatives; forward exchange rate contracts, Options, Swaps. Correspondent banking, NRI accounts 
• Documentary letters of Credit - 
• UCPDC 600, various facilities to exporters and importers. 
• Risks in foreign trade, role of ECGC, types of insurance and guarantee covers or ECGC. 
• Role of Exim Bank - 
• Role of RBI and exchange control - 
• Regulations in India, Role and rules of FEDAI - 
• Role of FEMA and its rules

MODULE - B : Risk Management 

• Risk-Concept
• Risk in Banks
• Risk Management Framework
• Organisational Structure
• Risk Identification
• Risk Measurement
• Sensitivity
• Basis Point Value (BPV)
• Duration
• Downside Potential
• Value at Risk, 
• Back Testing - 
• Stress Testing - 
• Risk Monitoring and Control - 
• Risk Reporting - 
• Market Risk identification, 
• Measurement and management / credit risk - rating methodology, risk weights, 
• Eligible collateral for mitigation, guarantees; credit ratings, transition matrices, default probabilities,
• Credit risk spreads, risk migration and credit metrics, 
• Counter party risk. Credit exposures, recovery rates, risk mitigation techniques
• Operational and integrated Risk Management - 
• Risk management and capital Management – ‘Basel Norms - 
• Current guidelines on risk management 

MODULE - C : Treasury Management

• Concepts and function; 
• Instruments in the treasury market, 
• Development of new financial products, control and supervision of treasury management, 
• Linkage of domestic operations with foreign operations. 
• Interest rate risk, 
• Interest rate futures Mix / Pricing of Assets, 
• Liabilities - On-Balance Sheet Investment and Funding Strategies - 
• Stock options, 
• Debt instruments, 
• Bond portfolio strategy, 
• Risk control and hedging instruments. 
• Investments - 
• Treasury bills, 
• Money market instruments such as CDs, CPs, IBPs Securitisation and Forfaiting; 
• Refinance and re-discounting facilities. 
• Derivatives - Credit Default Swaps / Options 

MODULE - D : Balance Sheet Management

• Prudential norms-Capital Adequacy. 
• Implementation of ‘Basel Norms guidelines : 
• RBI guidelines. 
• Banks Balance Sheet - 
• Components of assets / Liabilities / ALM Implementation - 
• RBI Guidelines -
• Gap Analysis - Mechanics, Assumptions, and Limitations -
• Illustrations of Actual Gap Reports - 
• The Relationship Between Gap and Income Statement - 
• Funding Liquidity - 
• Trading / Managing Liquidity - 
• Contingency Funding - 
• Business Strategies : 
• Profit and profitability analysis, 
• Asset Classification - provisioning - effect of NPA on profitability,
• Shareholder value maximization & EVA- profit planning-measures to improve profitability.
• Disclosure guidelines.